Over 3,000 companies removed! What's going on with this major crackdown in China's insurance industry?

On February 27, the National Financial Regulatory Administration issued a statement with the latest data on the ongoing market cleanup and improvement efforts for insurance intermediaries since 2024.

From 2024 to 2025, a total of 3 insurance intermediary groups have been deregistered or revoked nationwide, along with 57 professional insurance intermediary legal entities; 3,730 branches of professional insurance intermediaries have been phased out, and 226 insurance brokerage agencies have been eliminated.

Behind these figures, a new trend is emerging in China’s insurance industry.

Why does a major cleanup of insurance intermediaries matter to every policyholder?

When you buy a life insurance policy at a bank or consult about critical illness insurance on a platform, there is often a licensed insurance intermediary providing the service.

According to Zishi Tang, these institutions mainly fall into two categories: one is dedicated insurance sales intermediaries (such as insurance brokers or agencies), and the other is part-time agents who sell insurance as a secondary business (such as at 4S shops).

Both types of institutions represent insurance companies’ products and also bear customer service responsibilities.

In recent years, some intermediaries have deviated from proper conduct: some have never actually operated after registration, becoming “shell” companies; some fake staffing or fabricate policies to extract commissions; others lack basic information systems, resulting in chaotic customer data and inability to respond promptly during claims.

These behaviors not only disrupt the market but also raise doubts about policy validity and hinder claims processing.

Insurance Intermediary “Red Flags”

What behaviors are regulators “zero-tolerance” towards amid the wave of intermediary cleanup?

The official website of Beijing Jincheng Tongda Law Firm features a research article titled “Analysis of Compliance Red Lines and Governance Points for Insurance Intermediary Institutions,” which summarizes recent common violations among insurance intermediaries.

Specifically:

1. Operating without a license or collaborating with unlicensed entities;

2. Falsifying reports or financial data;

3. Using false identities during sales or allowing unlicensed personnel to operate;

4. Operating across provinces without permission, such as an intermediary registered in Province A selling non-exempt insurance products to clients in Province B;

5. Breaking the “report and operate” principle by off-book rebates or fictitious expenses to surpass commission limits;

6. Weak internal controls, with failures in personnel management, funds, and anti-money laundering measures.

Regulatory agencies across regions frequently issue “early warnings”

Zishi Tang’s review found that regulatory authorities have repeatedly warned about the risks of illegal insurance intermediaries over the past year.

The Heilongjiang Regulatory Bureau of the China Banking and Insurance Regulatory Commission (CBIRC) has identified organizations with names including “insurance claims,” “insurance consulting,” or “insurance services” that lack the proper licensing to conduct insurance intermediary business.

They also advise consumers to check the licensing and practitioner information of insurance intermediaries on the “Insurance Intermediary Cloud Platform” before purchasing insurance or using related services.

The Xiamen Regulatory Bureau listed illegal intermediaries that use “policy surrender,” “claims,” or “sales” as pretexts to infringe on consumers’ legal rights.

Specific “tricks” include:

Type 1: “Full Refund” Trap

Behavior: Criminals promote on social media, via calls or texts, claiming they can assist with full refunds or that there are no charges if unsuccessful, enticing consumers to entrust them with surrendering policies.

They often charge a fee proportional to the surrender amount or fraudulently collect deposits or guarantees upfront, leading to greater financial loss than normal surrender, loss of original coverage, and potential legal consequences for forged evidence.

Type 2: “Injury Bounty Hunter” Scheme

Behavior: Approaching victims at accident scenes or near hospitals, promising “high compensation” or “quick claims,” and persuading victims to appoint them as agents.

Consumers pay high fees, and their sensitive personal information (ID cards, bank details) may be sold for scams or illegal lending.

Type 3: “Unified Insurance” Scam

Behavior: Fraudsters posing as insurance company staff, misleading consumers into purchasing “vehicle safety pooling” under the guise of “formal commercial auto insurance.”

Method: Attracting clients with low prices, claiming to be from “legitimate insurance companies” or “sales agents,” and charging fees.

These operators are not licensed insurers; in case of traffic accidents, consumers risk not receiving full compensation.

Insurance Intermediaries Are Not the Only Ones Resizing

Zishi Tang’s research shows that China’s insurance industry reform involves two parallel but separate sales teams:

One is the sales staff of the aforementioned insurance intermediaries—independent third-party agencies like insurance brokers or professional agencies, dedicated to selling and servicing insurance products.

The other is insurance company agents (often called “salespeople”)—individuals directly contracted with life insurance companies, representing the company in sales.

Their identities, affiliations, and regulatory rules differ.

Notably, while cleaning up “shell” intermediaries, insurance companies’ own agent teams have also undergone significant adjustments.

The “2025 China Insurance Intermediary Market Ecosystem White Paper,” co-authored by Peking University HSBC Business School, indicates that by the end of 2024, the number of registered life insurance agents (salespeople) was 2.64 million.

These agents mainly sell life, health, and accident insurance—products that protect “life and health.”

While this is a significant reduction from the peak of 9.12 million in 2019, the decline has narrowed compared to 2.81 million at the end of 2023.

Despite the substantial reduction in agent numbers, the overall quality of the industry is improving. In 2024, China’s insurance depth reached 4.2% (insurance premiums as a percentage of GDP), higher than 4.07% in 2023; insurance density (per capita premium) increased from 3,635 yuan to 4,046 yuan.

This indicates that, even with fewer agents, premium income continues to grow, reflecting a more professional and efficient sales force and increasing customer willingness to buy insurance.

Disclaimer: The content and data in this article are for reference only and do not constitute investment advice. Please verify before use. Any operation based on this information is at your own risk.